I had an interesting conversation with Mike the other day. I see him occasionally as we both hike up the hill to the Ajijic chapel for exercise. On the way down, we exchanged views on the consequences of outsourcing jobs and the political whining about “losing American jobs” that both parties seem to find satisfying; while all the time intending to do exactly nothing about it.
Cheap labor and skills was the subject. Corporate outsourcing of jobs on the one hand and politically complicit behavior towards “illegal aliens” providing a large supply for “insourcing” low paying jobs on the other was the essence of our discussion.
The same day, I read this excerpt from the Christian Science Monitor:
The vanishing American computer programmer. Move to increase number of foreign worker visas fails in Senate, but that has not stopped what critics call a push for cheaper labor. By David R. Francis. Excerpts:
A popular video recently posted on the Internet’s YouTube shows an immigration lawyer talking to a group of business people in May about the process of hiring foreigners for their companies. “Our goal is clearly not to find a qualified US worker,” says the attorney in the video, an immigration lawyer at Cohen & Grigsby, a firm in Pittsburgh. ”‘In a sense, that sounds funny, but it’s what we’re trying to do here.”
To Norm Matloff, a professor of computer science at the University of California at Davis, such efforts to use loopholes in immigration laws that were supposed to give Americans and legal residents first crack at high-tech and other jobs is “absolutely outrageous.”
“The real goal is to hire ‘cheap labor,’ charges Dr. Matloff. High-tech executives had backed a provision in the comprehensive immigration bill that failed in the Senate last Thursday to boost the number of H-1B or other temporary visas for highly educated foreign workers. Now, the focus will shift to ‘stand-alone’ bills already before Congress that would accomplish the same goal, notes a spokesman for the Software & Information Industry Association.
“There is nothing new in this video,” he (Matloff) says. He recalls getting a document years ago in which a proponent of H-1B visas referred to the arsenal of tools companies can use to legally reject any American applicant for a job in favor of a foreign worker. But now that those tactics are on video, ‘everything changes,’ Matloff says. Viewers can see and hear with their own eyes and ears the words of this immigration lawyer and ‘his utter lack of scruples.’
And this from August 13 issue of Business Week:
And by hiring tens of thousands of people in developing nations, IBM gains more than the benefit of low-cost labor. It’s also helping to build strong economies that are now becoming sizable markets for its goods and services. Revenues from the so-called BRIC countries—Brazil, Russia, India, and China—now represent about 5% of IBM’s total sales and are growing at 25% per quarter. Strategic outsourcing contracts from Indian companies grew nearly 150% last quarter. “These are the markets that will hypergrow over the next few years, and IBM will grow even faster there,” says Michael Cannon-Brookes, vice-president for strategy in emerging markets.
In a completely free market economy it is inevitable that jobs will go where the skill level is comparable but cheaper. So if a Chinese man who graduated from a technical university with equivalent skills to an American MIT computer science geek, it makes perfect sense for IBM to have their software developed by the Chinese man for ½ the cost or less and no requirement for benefits. At the same time it allows the man to be a consumer in a country that wasn’t able to consume much a few decades ago: China, India, Indonesia and Russia just to name a few. IBM now has around 60,000 Indian employees, virtually all their software development done in Bangalore. Rather than bemoan the obvious, in point of fact corporations have an obligation to their shareholders to go for the bottom line. Morality is not part of the equation.
But this dynamic is gaining momentum and is clearly costing the middle class in the USA. We are inadvertently eroding our own workforce. The middle class has been both the engine that has driven the greatest consumer economy in history and simultaneously itself becoming the largest consumer group, fueling itself in a sense. In the process of looking to the bottom line, we are killing the golden goose. Or cooking it.
Why? Because corporations like IBM are also uplifting the economies of other, poorer, countries and funding new, growing middle class consumer groups there. In effect, we are capitalizing other countries’ economic growth to the long term detriment of our own.
At the same time, millions of Latinos come to the USA without proper papers, don’t pay taxes and fulfill the cheap labor requirements of businesses who look the other way….because, of course, they can force the laborers to work for even less by intimidation, threats to call the authorities. Tsk tsk. More jobs lost to American labor because of insourcing.
If our motives were “Christian” or deliberately altruistic that would be one thing. Then Jesus would approve wholeheartedly…..helping impoverished countries out of their poverty and helping the poor in neighboring countries.. But it isn’t altruistic at all. It’s bottom line profit margin. So inadvertently, corporate capital goes to help poor countries because of their need to increase profits but at the same time erode the capital that has traditionally driven our own economy.
And farmers need the Mexican laborers to bring in the crops. If all “illegals” were deported, the agribusiness would go bankrupt and the nation wouldn’t eat. If the work was done to alleviate poverty among poor Mexicans, Jesus would also be supportive of agri-virtue. But the reality is that everyone foams at the mouth over the problem but profit wins out in the end.
One last thought. Speaking of Jesus’ messages, there is real evil involved in this process. The sweat shops abroad making our consumer products are treated and manipulated like slaves. The living conditions of our insourced cheap labor are brutal and fundamentally inhumane. Where is Cesar Chavez when we need him again?
Business giveth, Business taketh away. Blessed be the name of Business. Meanwhile, morality aside, the middle class of America is in very deep trouble.
“Jesus loves me, this I know, for our spread sheets tell me so.”